As Gen Z and millennials enter their ‘prime furniture-buying years’, online furniture retailers, such as Temple & Webster are benefiting. Continuing to align with this age group’s needs – as they move out, get married, start a family, rent bigger places or buy homes – will be key to growth moving forward. Temple & Webster on Tuesday recorded record results for the first half of FY24, surpassing the 1 million active customer mark in February 2024. Co-founder and CEO Mark Coulter
ter attributed the revenue growth to an increase in both first-time and repeat customers. Investing in the right areas Looking ahead, Coulter said that aggressive marketing to increase brand familiarity and a focus on digital spend will be key to achieving Temple & Webster’s ambitious target of reaching $1 billion in annual revenue within the next three to five years. “We need more more of the country to not only know about us, but to experience us and experience the proposition and understand they can save money by shopping with us,” he told Inside Retail. “One of the big ones is increasing and being more aggressive with our marketing. We have upped our digital spend. We’ve kicked off our brand marketing campaigns, we’re on TV, we’re in out-of-home [advertising], so we just want more and more Australians to know about Temple & Webster.” While Temple & Webster is the market leader for online furniture purchases in Australia, there is still a lot of room to grow.“Most Australians haven’t even visited Temple & Webster, let alone bought from us. We need to let people know about our great proposition,” Coulter said. “We’ve rolled out a brand campaign for the first time and the promotional calendar is tighter and our range is better than ever. There’s a lot that goes into why people are buying with us.” Once more people are aware of Temple & Webster, Coulter believes the next step will simply be not dropping the ball as the business scales towards $1 billion in annual revenue. This will mean maintaining quality scores and customer satisfaction. “We’ve worked through all the scaling challenges. So for us, it’s about ensuring we maintain what we’re doing as we scale, not necessarily changing what we’re doing,” he said. Investing in its people is another aspect of the business’ growth strategy. For the first time, Temple & Webster now has a team of three industrial designers who create the brand’s own product, to complement the buying team and third-party products the business stocks. “We’re designing our own product and that will complement our buying team, which works with our factories to tailor products to the local market, and then our category management team which deals with the local suppliers,” Coulter said. Customer acquisition By cohort, Gen Z and millennials make up the largest percentage of Temple & Webster customers, and they are also the fastest-growing cohort. “A lot of the heavy lifting will be done by the trend from offline to online. That trend will continue as Gen Z and millennials get older, they are coming into their prime furniture,-buying years, getting married, maybe some of them are having kids moving out, renting bigger places or buying places. Those life stage events are rolling forward.” Temple & Webster is continuing to invest in its customer experience to convert more of these potential customers into active ones. Last week, the retailer went live with a test of its AI-based interior design chatbot. The team expects this to have a positive impact on the conversion rate of browsers into customers. “I know it is a bit of a buzzword,” Coulter said in reference to AI, “but we do have a whole bunch of initiatives that are already live. Helping customers get answers more quickly, through to search and product recommendations.”. A strong rate of both repeat purchases and first-time customers was the driving force behind the 23 per cent year-on-year increase in revenue that Temple & Webster reported in H1 FY24. This led to the overall number of active customers growing significantly. “We actually have a headwind on our average order value as people migrate into looking for more value. The growth has come from our first-time and repeat customers,” Coulter explained. While many retailers use loyalty programs to retain customers, for now, Temple & Webster has no plans to create one of its own. “We don’t have a loyalty program or anything like that. And that’s not to say we won’t ever have one,” Coulter said. “My philosophy is that it all starts and ends with, ‘have you done a great job for the customer? Did you have the product that were looking for? Did you get it to them on time? Was it at the right price? Did you meet their expectations for value and quality? If there was an issue, did you fix it on time?’ You know, the basics of retail. “If you get that right, customers will naturally come back and if you don’t get it right. It doesn’t matter how many loyalty points you give them. They’re not going to come back. We’re focused on the basics you know, making sure our range is right, our deliver experiences good and customer service is right.” New hires A search for a new CFO is underway, to take over from the outgoing CFO Mark Tayler, but the team has no intention of rushing this process. “Mark is not going anywhere he’s still at Temple & Webster, he’s just transitioning into his new role and is still CFO during this time,” Coulter said.Tayler will remain in the company focusing on investor relations. Key areas that have been identified as strategically important for the growth of the business, and for which Temple & Webster is actively recruiting, include the B2B trade and commercial sales team, the tech team, industrial designers, category managers and buyers as part of the sourcing team. Looking ahead “We don’t put out guidance regarding growth. We have said that we want to get to that billion-dollar sales target in three to five years and that’s essentially an annual growth rate of between 20 and 36 per cent, depending on on timing of getting to that billion dollars,” Coulter said. Temple & Webster has started the 2024 calendar year in its “strongest financial position ever,” reporting strong growth, record active customer numbers, high customer satisfaction and product ratings. The focus moving forward will be on incremental improvement driven by the product range and customer service.